COPY

1

2

3

4

5

6

7

8 9

10

11

12

13

14

15

16

17

18

19

20 21 22

23

24

25

26

27

28

HUB LAW OFFICES Ford Greene, Esquire 711 Sir Francis Drake Blvd. San Anselmo, CA 94960 (415) 258-0360

HUB LAW OFFICES Ford Greene, Esquire California State Bar No. 107601 711 Sir Francis Drake Boulevard San Anselmo, California 94960-1949 Telephone: (415) 258-0360

PAUL MORANTZ, ESQ.

P.O. Box 511

Pacific Palisades, CA 90272 (213) 459-4745

Attorney for Defendant GERALD ARMSTRONG

3 ft

ORIGINAL FILED

SEP 1 0 1992

LOS ANGELES SUPERIOR COURT

RECEIVED SEP 1 2 1992

HUB LAW OFFICES

SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF LOS ANGELES

CHURCH OF SCIENTOLOGY INTERNATIONAL, a California not-for-profit religious corporation ;

Plaintiffs,

vs .

GERALD ARMSTRONG; DOES 1 through 25, inclusive,

Defendants .

)

AND RELATED CROSS-COMPLAINT )

)

No. BC 052395

DEFENDANTS ARMSTRONG AND TGAC'S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO SCIENTOLOGY'S MOTION TO STRIKE PORTIONS OF ANSWER AND CROSS-COMPLAINT

DATE: September 17,

TIME: 8:30 a.m.

DEPT: 30

NO TRIAL DATE NO DISCOVERY CUT OFF NO MOTION CUT OFF

1992

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

21

26

is

I.

II.

III.

IV.

N

TABLE OF CONTENTS

Page

INTRODUCTION

THE MOTION TO STRIKE SHOULD BE DENIED BECAUSE THE LANGUAGE CLAIMED TO IRRELEVANT, IMPROPER AND SCANDALOUS ARE DENIALS IN AFFIRMATIVE WORDS WHICH ARE BASED ON ARMSTRONG'S PERSONAL EXPERIENCE AS WELL AS CONSISTENT JUDICIAL FINDINGS REGARDING THE NATURE OF SCIENTOLOGY .

A. Affirmative Statements Can Be Functionally

Equivalent To Denials Of Fact .

B. Judicial Opinions Characterize Scientology

In Language Which It Calls Irrelevant, Improper And Scandalous .

C. The Answer .

D. The Cross-Complaint .

THE APPLICATION OF THE STATUTORY SCHEME TO SCIENTOLOGY WHEREBY ORGANIZATIONS CLAIMING TO BE RELIGIOUS ARE EXONERATED FROM BEING THE SUBJECT OF PUNITIVE DAMAGES IN PLEADINGS

VIOLATES DUE PROCESS AND EQUAL PROTECTION . 14

CONCLUSION

15

-1-

AHMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

TABLE OF AUTHORITIES

Page

*Wollersheim . 11

. . 10

Allard v. Church of Scientology of California

(1976) 58 Cal . App. 3d 439 . 6

B.F.G. Builders v. W & C Company (1962) 206 Cal. App. 2d 752

23 Cal.Rptr. 815 . 14

Cahill Brothers, Inc. v. dementia Company (1962) 208 Cal. App. 2d 367

25 Cal.Rptr. 301 . 3

Church of Scientology of California v. Armstrong

(1991) 232 Cal. App. 3d 1060 . 4

Church of Scienttology v. Commissioner of Internal Revenue (1984) 83 T.C. 381

aff'd, 823 F . 2d 1310 (9th Cir. 1987) . 6-9

Elliott v. Bertsch (1943) 139 P.2d 332 2

Founding Church of Scientology v. Webster

(D.C.Cir. 1986) 802 F.2d 1448 11

FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367

282 Cal.Rptr. 508 . 2, 3

Frisch v. Caler

(1862) 21 Cal. 71 . 3

Gospel Army v. Los Angeles (1945) 27 Cal. 2d 232

163 P . 2d 704 . 14

Lever v. Garoogian

(1974) 41 Cal. App. 3d 37

115 CR 856 . 2

Pollack v. Apsbury

(1953) 14 F.R.D. 454 . 12

-ii-

ARMSTROHG'S MEMORANDUM IB OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ES

Rancho Santa Margarita v. Vail 11 Cal. 2d 501

81 P. 2d 533 . 3

Stearns Rancho Company v. A,T & S.F. R.R. Company (1971) 19 Cal . App . 3d 24

96 Cal.Rptr. 317 . 13

Trafton v. Youngblood 69 Cal. 2d 17

69 CR 568 3

Trizera v. McDonnell 131 Cal. App. 473

21 P. 2d 706 . 3

United States v. Zolin

(9th Cir. 1987) 809 F.2d 1411 . 10

United States v. Zolin

(9th Cir. 1990) 905 F.2d 1344

cert, denied, sub.nom.

Church of Scientology v. United States

(1991) lllS.Ct. 1309 . 11

United States v. Zolin

(1989) 109 S.Ct. 2619 . 10

Wollersheim v. Scientology

(1989) 212 Cal. App. 3d 872

pet. for cert, granted, vacated and remanded on other

grounds, 111 S.Ct. 1298 (1991);

aff'd on remand 4 Cal. App. 4th 1074 (1992);

review granted S011790 (1992) . 10, 11

Yick Wo v. Hopkins

(1886) 118 U.S. 356 . 14

Witkin, California Procedure (3d. Ed. 1985) , Vol . 5

14

-lii-

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ire

e Blvd.

HUB LAW OFFICES Ford Greene, Esquire California State Bar No. 107601 711 Sir Francis Drake Boulevard San Anselmo, California 94960-1949 Telephone: (415) 258-0360

PAUL MORANTZ, ESQ.

P.O. Box 511

Pacific Palisades, CA 90272 (213) 459-4745

Attorney for Defendant GERALD ARMSTRONG

SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF LOS ANGELES

CHURCH OF SCIENTOLOGY )

INTERNATIONAL, a California )

not-for-profit religious )

corporation; )

)

Plaintiffs, )

)

vs . )

)

GERALD ARMSTRONG; DOES 1 )

through 25, inclusive, )

)

Defendants. )

)

_ )

)

AND RELATED CROSS-COMPLAINT )

)

_ )

I. INTRODUCTION V

This is not a simple breach

No. BC 052395

DEFENDANTS ARMSTRONG AND TGAC'S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO SCIENTOLOGY'S MOTION TO STRIKE PORTIONS OF ANSWER AND CROSS-COMPLAINT

DATE: September 17, 1992

TIME: 8:30 a.m.

DEPT: 30

NO TRIAL DATE NO DISCOVERY CUT OFF NO MOTION CUT OFF

of contract case wherein

Scientology has set forth the terms of the contract and the alleged breaches thereof upon which it brings suit. Scientology's

1 Armstrong predicates his opposition to the motion to strike on this memorandum, any supplemental memoranda, as well as on all the papers on file in this case.

Page 1

ARMSTRONG'S MEMORANDUM IH OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8 9

10

11

12

13

14

15

16

17

18

19

20 21 22

23

24

25

26

27

28

HUB LAW OFFICES Ford Gre«ne, Esquire 711 Sir Francis Drake Blvd. San AnseLmo, CA 94960 (415) 258-0360

complaint has, as one would expect, put its own spin on the facts, particularly with respect to its characterizations of itself and its actions and Armstrong and his. Thus, in order for Armstrong to protect both his right and interest in ascertaining the truth in this litigation, it is necessary for him to traverse Scientology's allegations affirmatively rather than by mere negation. This is particularly necessary in order that Armstrong's right to probe the relevant facts is preserved.

II. THE MOTION TO STRIKE SHOULD BE DENIED BECAUSE THE LANGUAGE

CLAIMED TO IRRELEVANT, IMPROPER AND SCANDALOUS ARE DENIALS IN AFFIRMATIVE WORDS WHICH ARE BASED ON ARMSTRONG'S PERSONAL EXPERIENCE AS WELL AS CONSISTENT JUDICIAL FINDINGS REGARDING

THE NATURE OF SCIENTOLOGY. _ _ _

A. Affirmative Statements Can Be Functionally

Equivalent To Denials Of Fact. _

In order to traverse fact statement A, one is not necessarily limited to asserting not-A. One may traverse the assertion of fact A by the assertion of fact B. While plaintiff may assert its version of the facts as A, defendant may assert his version of the facts as B. Thus, for the purposes of pleading a defendant's B is the functional equivalent of asserting not-A.

This elementary logic is reflected in the law of pleading.

An answer must plead facts "averred as carefully and with as much detail as the facts which constitute the cause of action and are alleged in the complaint." FPI Development. Inc, v. Nakashima (1991) 231 Cal.App.3d 367, 282 Cal.Rptr. 508, 518. If the facts alleged in the answer show that some essential allegation of the complaint is not true, then said facts constitute a traverse.

Lever v. Garooaian (1974) 41 Cal.App.3d 37, 39.

A denial does not have to be literally set forth. A traverse of the allegations of the complaint may be effective if the substance of the language employed therein is the equivalent to what otherwise would have been an express denial. Elliott v. Bertsch (1943) 139 P.2d 332, 324.

"The mere fact that an answer contains an affirmative allegation does not mean per se that it is setting up 'new matter.' An averment in the answer contrary of what is

Page 2 .

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

iS

ire

e Btvd.

' — v

alleged in the complaint is equivalent to a denial. (Trizera v. McDonnell. 131 Cal.App. 473, 475, 21 P.2d 706.) The basic consideration is whether the matters of defense are responsive to the essential allegations of the complaint, i.e., whether they are contradicting elements of plaintiff's cause of action or whether they tender a new issue, in which case the burden of proof is upon the defendant as to the allegation constituting new matter. (Rancho Santa Margarita v. Vail. 11 Cal. 2d 501, 81 P.2d 533.) The distinction is well stated by the leading case of Frisch v. Caler (1862) 21 Cal. 71, as follows: 'Whether matter is new or not, must be

determined by the matter itself, and not by the form in which it is pleaded - the test being whether it operates as a traverse or by way of confession and avoidance. A plea tendering no new issue, but controverting the original cause of action, is a mere traverse, and as nothing new is involved in it, to call it a new matter would be a misapplication of terms. It is not essential to a traverse that it be expressed in negative words - the form of the plea depending upon the allegation it is intended to meet; a negative allegation requiring an affirmative plea, and vice versa.

New matter involves of necessity a new issue, or the introduction of a new ingredient as the basis of one, and a new issue can only arise upon a plea of confession and avoidance.

Cahill Brothers. Inc, v. dementia Company (1962) 208 Cal.App. 2d 367, 385-86.

For the defendant to set forth his version of the facts is imperative because of the relationship between the pleadings and what is considered to be relevant to the action. The rule is well settled that evidence "cannot be used to establish an issue that the parties have not made in their pleadings." Trafton v. Youngblood ( ) 69 Cal. 2d 17, 32. Indeed, the "role of the

pleadings [is] . . . the outer measure of materiality . . .." FPI Development . supra , 231 Cal.App. 3d 367, 282 Cal.Rptr. 508, 515.

Since the pleadings determine the issues, if the characterizations Scientology sets forth in its complaint are

Page 3 .

ARMSTRONG'S MEMORANDUM IH OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ES

false, Armstrong is entitled to set forth those which are true in his Answer and Cross-Complaint.

Thus, if Scientology pleads factual characterization A, and Armstrong says the proper characterization is B, he has traversed the allegation by stating what are, as to him, the true facts.

B. Judicial Opinions Characterize Scientology In Language Which It Calls Irrelevant, improper And Scandalous

The instant action arises from an agreement that purportedly settled Armstrong's cross-complaint against Scientology in Los Angeles Superior Court Action No. C 420153. (Armstrong I ♦ ) Armstrong prevailed on Scientology's complaint against him. (Exhibit 1, 1:22-24.) affirmed on appeal. Church of Scientology of California v. Armstrong (1991) 232 Cal.App.3d 1060.

On June 22, 1984, the Honorable Paul G. Breckenridge, Jr., filed his Memorandum of Intended Decision in Armstrong I ♦ In that Decision, Judge Breckenridge specifically found the Scientology organization to be "on one hand pathetic, and on the other, outrageous. . . . [Scientology] or its minions is fully capable of

intimidation or other physical or psychological abuse if it suits

their ends." (Ex. 1. at 8: _ -6.) He further provided the

following factual findings, inter alia, regarding Scientology:

"In 1970 a police agency of the French Government conducted an investigation into Scientology and concluded "this sect, under the pretext of 'freeing humans' is nothing in reality but a vast enterprise to extract a maximum amount of money from its adepts by (use of) pseudo-scientific theories, by (use of) 'auditions' and 'stage settings' (lit. to create a theatrical scene') pushed to extremes (a machine to detect lies, its own particular phraseology . . ) , to estrange

adepts from their families and to exercise a kind of blackmail against persons who do not wish to continue with this sect." [footnote omitted] From the evidence presented to this court in 1984. at the very least, similar conclusions can be drawn. In addition to violating and abusing its own members civil rights, the organization over the years with its "Fair Game" doctrine has harassed and abused those persons not in the Church whom it perceives as enemies. The

Page 4 .

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

s

ire

s Btvd.

I960

organization is clearly schizophrenic and paranoid, and this bizarre combination seems to be a reflection of its founder LRH [L. Ron Hubbard] . The evidence portrays a man who has been virtually a pathological liar when it comes to his history, background, and achievements. The writings and documents in evidence additionally reflect his egoism, greed, avarice, lust for power, and vindictiveness and aggressiveness against persons perceived by him to be

disloyal or hostile. "

Id. at 8: 7-9:4. (Emphasis added.) f/

Scientology's history of judicially, and extra-judicially , attacking those whom it perceives to be its "enemies" by the imposition of its polices of "Fair Game" and "Attack The

In contrast to his findings regarding Scientology, Judge Breckenridge found Armstrong and his witnesses to be credible and sympathetic. He wrote:

"As indicated by its factual findings, the court finds the testimony of Gerald and Jocelyn Armstrong, Laurel Sullivan, Nancy Dincalcis, Edward Walters, Omar Garrison,

Kima Douglas, and Homer Schomer to be credible, extremely persuasive and the defense of privilege or justification established and corroborated by this evidence ... In all critical and important matters, their testimony was precise. accurate . and rang true. The picture painted by these former dedicated Scientologists, all of whom were intimately involved [with the highest echelons of power in] the Scientology Organization, is on one hand pathetic, and on the other, outrageous. Each of these persons literally gave years of his or her respective life in support of a man, LRH [L. Ron. Hubbard], and his ideas. Each has manifested a waste and loss or frustration which is incapable of description. "

Id. at 7:9-26. (Emphasis added.)

3 Fair Game is a policy to be enforced against "enemies" of Scientology or "suppressive persons." Allard v. Church of Scientology of California (1976) 58 Cal.App.3d 439, 443, fn. 1; Church of Scientology of California v. Armstrong, supra . 232 Cal.App.3d at 1067 [Defendant Armstrong declared suppressive person, labelled an enemy of the church and subjected to fair game policy.]

Page 5 .

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

21

26

is

Attacker" V is long standing. According to the Fair Game Policy, such persons upon whom it is imposed,

"[m]ay be deprived of property or injured by any means by any Scientologist without any discipline of the Scientologist. May be tricked, sued or lied to or destroyed. "

Armstrong Decl. Ex. 2, HCO Policy Letter of 18 October 1967. See also Allard v. Church of Scientology of California (1976) 58

Cal . App. 3d 439, 443, fn. 1. f /

In the most exhaustive analysis of the commercial motivation of the Scientology organization taken to date, the U.S. Tax Court found that Scientology was largely controlled by a small circle of corrupt individuals whose main, if not only motivation, is to "MAKE MONEY . . . MAKE MONEY . . . MAKE MONEY . . . . " Church of Scientology v. Commissioner of Internal Revenue (1984) 83 T.C.

381, 422, af f4 5 * 7 d . 823 F.2d 1310 (9th Cir. 1987). (sometimes

4 A corollary to the Fair Game Policy, discussed below, is Scientology's Policy Letter of 25 February 1966 entitled "Attacks on Scientology." Therein, the policy is laid out to "[s]pot who is attacking us" and to "[s]tart feeding lurid, blood, sex, crime actual evidence on the attacker to the press." Armstrong Decl. Exhibit 2-A. Another Scientology policy states:

"The DEFENSE of anything is untenable. The only way to defend anything is to ATTACK, and if you ever forget that, then you will lose every battle you are ever engaged in, whether it is in terms of personal conversation, public debate, or in a court of law. NEVER BE INTERESTED IN CHARGES. DO, yourself, much MORE CHARGING, and you will WIN."

Armstrong Decl. Exhibit 1, Dissemination of Material from Level O Checksheet at p. 54. It is the implementation of Fair Game Policy and Attack the Attacker Policy that has spurred the allegations underlying Scientology's claims in the instant lawsuit.

5 Scientology's litigation policy is brutal:

The law can be used very easily to harass, and enough harassment on somebody who is simply on the thin edge anyway, well knowing that he is not authorized, will generally be sufficient to cause his professional decease. If possible, of course, ruin him utterly.

Armstrong Decl. Ex. 2, Dissemination of Material from Level O Checksheet at p. 55.

Page 6 .

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

£

ire

s Blvd.

referred to hereinafter as the "CSC Tax Case.")

In a 145-page opinion, culminating in the revocation of Scientology's tax-exempt status under the Internal Revenue Code, Judge Sterrett held that Scientology (1) is "operated for a substantial commercial purpose;" (2) "[Scientology's] net earnings benefit L. Ron Hubbard [and] his family . . . .;" and (3)

"[Scientology] has violated well-defined standards of public policy by conspiring to prevent the IRS from assessing and collecting taxes due from [Scientology]." Id. 83 T.C. at 443. The court found that Scientology is essentially a profit-driven enterprise. He stated;

"Practically everywhere we turn, we find evidence of [Scientology's] commercial purpose. Certainly, if language reflects reality, [Scientology] had a substantial commercial purpose since it described its activities in highly commercial terms, calling parishioners 'customers'; missions, 'franchises'; and churches, 'organizations' — just to mention a few of the more glaring examples of [Scientology's] commercial vocabulary.

[Scientology] was eager to make money. This was expressed in [a Scientology policy directive dated] March 9, 1972 ... It sets out the governing policy of [Scientology's] financial offices by exhorting these offices to 'MAKE MONEY . . . MAKE MONEY . . . MAKE MONEY . . . MAKE

OTHER PEOPLE PRODUCE SO AS TO MAKE MONEY.' . . . This is not

an isolated policy letter coming back to haunt [Scientology] . The goal of making money permeated virtually all of [Scientology's] activities — its services, its pricing policies, its dissemination practices and its management decisions . "

Id. 83 T.C. at 475-76.

Judge Sterrett further found that L. Ron Hubbard and his family had used their control over the Scientology organization for purposes of covert personal enrichment:

"In the instant case, there can be no question that L. Ron Hubbard and his family are clearly private shareholders [of the Scientology corporation] . . . [T]he obvious indicia of

Page 7 .

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRJKE

1

2

3

4

5

6

7

8 9

10

11

12

13

14

15

16

17

18

19

20 21 22

23

24

25

26

27

28

benefit to L. Ron Hubbard and his family include salaries, directors fees, management fees, complete support of the family, and royalties; while covert indicia of benefit include repayment of alleged debts and unspecified amount and unfettered control over millions of dollars purportedly belonging to [the Scientology organization]."

Finally, Judge Sterrett's opinion is suffused with references to Scientology's systematic and methodical violations of criminal and civil law. The opinion initially notes that the trial memorandum filed by the Internal Revenue Service catalogued numerous Scientology policies and procedures which the IRS contended violated public policy. In part, such policies and procedures included:

"[1] Conspiracy to impede and obstruct the Internal Revenue Service . . .; [2] the infliction of psychic harm including

the loss of moral judgment through brainwashing accomplished by auditing and other practices and procedures; [3] the use of blackmail and intimidation to implement [Scientology's] 'fair game' policy; [4] the involuntary dissolution of marriage and family ties through the enforcement of [Scientology's] 'disconnect' policy; [5] involuntary detention and false imprisonment; [6] the making of false statement to immigration authorities . . .; [7] the removal

of large amounts of currency from the United States without disclosure; [8] the false registration of [Scientology's] fleet as private yachts used for pleasure when in fact they were used for paramilitary training and commercial activities; and [9] the drastic punishment of staff and members. "

Id. 83 T.C. at 411-12.

In an effort to narrow the evidentiary issues before the court. Judge Sterrett primarily focused both the trial and his opinion on Scientology's conspiracy against, and burglary of documents from, the Internal Revenue Service. The Court detailed the conspiracy as follows:

"The conspiracy spanned eight years, beginning in 1969 and continuing at least until July 7, 1977, when the FBI,

HUB LAW OFFICES Ford Greene, Esquire 711 Sir Francis Drake Blvd. San Anselmo, CA 94960 (415) 258 0360

Page 8 .

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

s

ire

; Blvd.

pursuant to a warrant searched [Scientology's] premises for evidence of the conspiracy and related crimes. The scheme involved manufacturing and falsifying records to present to the IRS, burglarizing IRS offices and stealing Government documents and subverting government processes for unlawful purposes. For example, Freedom of Information Act requests were planned for the purpose of having the IRS amass records in one central place where they would be easier to steal.

* * *

In pursuit of the conspiracy, [Scientology] filed false returns, burglarized IRS offices, stole IRS documents and harassed, delayed, and obstructed IRS agents who tried to audit [Scientology's] records.] [Scientology] gave false information to, and concealed relevant facts from, the IRS about its corporate structure ... in the end, Jane Kember, the Guardian Worldwide, acting just under L. Ron and Mary Sue Hubbard in [Scientology's] hierarchy, was convicted of burglarizing the offices of [the IRS'] Exempt Organizations Division on three occasions in 1976. The burglaries occurred while an extensive audit of [Scientology's] records was in progress. Furthermore, Mary Sue Hubbard, Duke Sneider and Henning Heldt were convicted of conspiring to obstruct justice. Their convictions in part rested on their efforts to conceal [Scientology's] connection to burglary of IRS offices and the theft of IRS documents relating to this case. Mary Sue Hubbard was [Scientology's] second highest ranking official. Duke Sneider was [Scientology's] president for part of 1975 and 1976. Henning Heldt was [Scientology's] vice- president. "

Id. 83 T.C. at 505-06.

The Tax Court's revocation of Scientology's tax-exempt status was specifically upheld by the Ninth Circuit Court of Appeals in Church of Scientology v. Commissioner of Internal Review (9th Cir.

Page 9 .

ARMSTRONG ' S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

s

ire

; Blv<L

1987) 823 F. 2d 1310. f /

In United States v. Zolin (1989) 109 S.Ct. 2619, 105 L.Ed.2d 469 V the Court addressed whether the attorney-client privilege between Scientology and some of its attorneys should be abrogated on the basis "that the legal service was sought or obtained in order to enable or aid the client to commit or plan to commit a crime or tort." Id. at 2630, 105 L.Ed.2d at 489. In Zolin. the Supreme Court reversed the Ninth Circuit's ruling in United States v. Zolin (9th Cir. 1987) 809 F.2d 1411 that the Government had not made a sufficient showing that there had been "illegal advice . . . given by [Scientology] attorneys to [Scientology] officials" to invoke the crime-fraud exception to the attorney-client privilege. Upon reversing and remanding, the Supreme Court ordered the Ninth Circuit to review partial transcripts of the tape recording sought by the IRS in an criminal investigation of Scientology to determine whether the crime-fraud exception to the privilege applied. On remand, the Ninth Circuit held:

"The partial transcripts demonstrate that the purpose of the [Mission Corporate Category Sort Out] project was to cover up past criminal wrongdoing. The MCCS project involved the discussion and planning for future frauds against the IRS, in violation of 18 U.S.C. <[ 371. [citation.] The figures involved in MCCS admit on the tapes that they are attempting to confuse and defraud the U.S. Government. The purpose of the crime-fraud exception is to exclude such transactions from the protection of the attorney-client privilege. "

6 Judge Sterrett's analysis is further developed and brought up to date in Church of Spiritual Technology v. United States (U.S. Claims Court, No. 581-88T, June 29, 1992) Bureau of National Affairs Tax decisions and Rulings (No. 131), July 8, 1992. (hereinafter referred to as "CST Tax Case.") Therein, the corporate structure of Scientology, including plaintiff CSI, is described as a " deceptis visus." Id. at K-5 to K-7 . Its financial structure and objectives, including criminal conspiracies, are discussed at K-9 to K-ll. Armstrong I is addressed therein at K-6, fn. 6.

Gerald Armstrong is mentioned in the Court's opinion at 105 L. Ed. 2d at 481.

Page 10.

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

s

re

! Blvd.

United States v. Zolin (9th Cir. 1990) 905 F.2d 1344, 1345. cert.

denied . Church of Scientology v. United States (1991) 111 S.Ct.

1309.

In Founding Church of Scientology v. Webster (D.C.Cir. 1986) 802 F.2d 1448, f/ the court queried "whether Scientology [was] a religious organization, a for-profit enterprise, or something far more extraordinary"? Id. 802 F.2d at 1451. It noted that "an organization claiming to be a religion that is built upon the word of a single individual venerated by the flock of the faithful is, it scarcely needs to be said, a rather different sort of entity." Id. at 1453. Ultimately, the Court affirmed the trial court's dismissal of Scientology's suit against the F.B.I. because of its failure, after eight years, to comply with discovery orders. Id. at 1449.

In 1989, the California Court of Appeal characterized the conduct of Scientology as similar to "a full-scale modern day 'inquisition'" that is "not worthy of constitutional protection." Wollersheim v. Scientology (1989) 212 Cal.App.3d 872, 888, pet. for cert, granted, vacated and remanded on other grounds, 111 S.Ct. 1298 (1991); aff'd on remand 4 Cal.App.4th 1074 (1992); review granted S011790 (1992) .

The Court of Appeal stated:

"To illustrate, centuries ago the inquisition was one of the core religious practices of the Christian religion in Europe. This religious practice involved torture and execution of heretics and miscreants. [Citation.] Yet should any church seek to resurrect the inquisition in this country under a claim of free religious expression, can anyone doubt the constitutional authority of an American government to halt the torture and executions? And can anyone seriously question the right of the victims of our hypothetical modern day inquisition to sue their tormentors for any injuries - physical or psychological - they sustained?

We do not mean to suggest Scientology's retributive

8

1458.

Gerald Armstrong is mentioned in Webster at 802 F.2d at

Page 11.

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

program . . . represented a full-scale modern day

'inquisition.7 Nevertheless, there are some parallels in purpose and effect. 'Fair game' like the 'inquisition' targeted 'heretics' who threatened the dogma and institutional integrity of the mother church. One 'proven' to be a 'heretic,' an individual was to be neutralized. In medieval times neutralization often meant incarceration, torture and death. [Citations.] As described in the evidence at this trial the 'fair game' policy neutralized the 'heretic' by stripping this person of his or her economic, political and psychological power."

Id. 212 Cal . App. 3d at 888.

The cases cited by Scientology to support its perception that this Court should strike the "venomous attacks such as Armstrong's in pleadings" (Memorandum in Support of Strike Motion at 7:5-5) are not apposite. Certainly, if Armstrong's allegations came out of the blue and were lacking not only a factual basis but also a decade of judicial confirmation, Scientology's characterization of them as irrelevant, improper and scandalous would have merit. The defendants (including the governor of New York, several Supreme Court Justices and a number of lawyer) named in Pollack v. Apsbury (1953) 14 F.R.D. 454, 455, did not have the track record as does

the Scientology Organization and all of its constituent corporate components .

C. The Answer

Based upon the above judicial decisions, ARMSTRONG traverses the allegations of the complaint and so as to alternatively characterize Scientology contrary to the manner in which in its complaint it characterizes itself. Not having the benefit of a notice of motion in which to set forth a specific response and discussion as to each passage Scientology wants to strike, Armstrong will have to identify the portions sought to be stricken and briefly indicate why they should not be.

Scientology does violate the norms of civilized conduct and abuses the justice process. See strike "1-a" in light of allegations in Cmplt. ^ 1 and Breckenridge Opinion, Allard. CSC Tax Case, CST Tax Case, Zolin. and Webster (hereinafter referred

Page 12 .

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO S TRUCE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

s

ire

s Blvd.

to collectively as "Armstrong's cases".

Scientology is a totalitarian cult of unreason, anti- religious in philosophy, antisocial in conduct, and political in motivation. See strike §§ 1-b, 1-i in light of allegations in Cmplt. HU 2, 5, and Armstrong's cases.

Scientology's Fair Game Policy, one of its "scriptures," advocates the use of litigation as one means to destroy what it perceives to be its enemies. See strike §§ 1-c, 1-d in light of allegations in Cmplt. H 2 and Armstrong's cases, particularly Allard [civil lawsuit for Scientology's effort to criminally frame Allard in implementation of Fair Game.]

Answer *[ 3 traverses the details in Cmplt. H 3. See strike §§ 1-e, 1-f, 1-g in light of allegations in Cmplt. U 3,

Armstrong's cases, and the defense of justification.

Answer H 4 traverses the details in Cmplt. H 4. See strike § 1-h in light of allegations in Cmplt. U 4 and Armstrong's cases.

Answer U 10 traverses the details in Cmplt. H 10. See strike § 1-j in light of allegations in Cmplt. H 10 and Armstrong's cases .

Answer U 3 5 traverses the details in Cmplt. H 35. See strike § l-k in light of allegations in Cmplt. U 35, Armstrong's cases, and the defenses of assumption of the risk and failure to mitigate.

Answer U 7 6 raises new matter and poises affirmative defenses by placing CSI as a component of the Scientology Organization as defined particularly in the Breckenridge Opinion, CSC Tax Case and CST Tax Case. See strike § 1-1.

Answer HU 81 and 82 set forth allegations in support of the defenses of illegality and fraud, respectively. Essentially, CSI would strike both defenses as set forth in strike §§ 1-m, 1-n and l-o. To strike the entire defense is in the manner of a demurrer which is not, therefore, a proper ground for a motion to strike.

1/ Stearns Rancho Company v. A.T & S.F. R.R. Company (1971) 19

9 See Memorandum in Support of Motion to Strike at p. 6:2- 14 for CSI's argument that the "allegations contained in this paragraph [don't] state a claim for fraud."

Page 13.

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRTKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ES

B.F.G. Builders v. W & C Company (1962) 206

Cal.App.3d 24, 41;

Cal . App . 2d 752, 759; Witkin, California Procedure (3d. Ed. 1985), Vol. 5, Pleading, § 959, p. 395.

D. The Cross-Complaint

As to the Cross-Complaint, Scientology also argues in its Memorandum at 6:15-7:3 should be stricken on statute of limitations grounds. Again, this objection to Armstrong's pleading is in the nature of a demurrer, which, based upon the above cited authorities, is not the proper subject of a motion to strike. Indeed, as to Armstrong's causes of action in the cross¬ complaint the paragraphs proposed as stricken are relevant to how and why Scientology's actions constitute an abuse of process and breach of contract because those actions are continuing and ongoing.

As in the Answer, the allegations of the Cross-Complaint which Scientology claims to be "improper and scandalous in content" should not be stricken because they are factual statements both regarding the nature of Scientology and its conduct toward Armstrong which is support by Armstrong's cases. III. THE APPLICATION OF THE STATUTORY SCHEME TO SCIENTOLOGY

WHEREBY ORGANIZATIONS CLAIMING TO BE RELIGIOUS ARE EXONERATED FROM BEING THE SUBJECT OF PUNITIVE DAMAGES IN PLEADINGS VIOLATES DUE PROCESS AND EQUAL PROTECTION. _ _ —

Armstrong traverses CSI's claim that it is a religion. Answer, ^ 2, 5. It is a denial of due process and equal protection for an organization like Scientology which has a documented history of dishonesty, failure of accountability, crime and civil violations to hide behind a statute designed to protect truly charitable organizations violates the principles of due process and equal protection because the application of the statute deprives Armstrong of his right to redress of grievances. Yick Wo v. Hopkins (1886) 118 U.S.

356; Gospel Army v. Los Angeles (1945) 27 Cal. 2d 232, 163 P. 2d 704, 712.

///

///

///

Page 14 .

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ES

IV. CONCLUSION

Based upon the foregoing points, and the authorities cited in support thereof, Armstrong respectfully submits that Scientology's motion to strike should be denied.

DATED: September 10, 1992

Attorneys for Defendant GERALD ARMSTRONG and THE GERALD ARMSTRONG CORPORATION

Page 15.

ARMSTRONG'S MEMORANDUM IH OPPOSITION TO MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

ire

s Blvd.

PROOF OF SERVICE

I am employed in the County of Marin, State of California. I

am over the age of eighteen years and am not a party to the above

entitled action. My business address is 711 Sir Francis Drake

Boulevard, San Anselmo, California. I served the following

documents: DEFENDANTS ARMSTRONG AND TGAC MEMORANDUM OF POINTS

AND AUTHORITIES IN OPPOSITION TO MOTION TO STRIKE; [Proposed]

ORDER

on the following person (s) on the date set forth below, by placing a true copy thereof enclosed in a sealed envelope with postage thereon fully prepaid to be placed in the United States Mail at San Anselmo, California:

Andrew Wilson, Esquire Also By Fax

WILSON, RYAN & CAMPILONGO

235 Montgomery Street, Suite 450

San Francisco, California 94104

LAURIE J. BARTILSON, ESQ. Also By Fax

Bowles & Moxon

6255 Sunset Boulevard, Suite 2000 Los Angeles, California 90028

Graham E. Berry, Esquire By Mail

LEWIS, D'AMATO, BRISBOIS & BISGAARD 221 North Figueroa Street. Suite 1200 Los Angeles, California 90012

[X]

(By Mail)

[ ]

(Personal)

[X]

(State)

I caused such envelope with postage thereon fully prepaid to be placed in the United States Mail at San Anselmo, California.

I caused said papers to be personally service on the office of opposing counsel.

I declare under penalty of perjury under the laws of the State of California that the above is true and correct.

DATED:

Page 16.

ARMSTRONG'S MEMORANDUM IN OPPOSITION TO MOTION TO STRIXE